Usio Announces Record Third Quarter 2020 Financial Results

SAN ANTONIO, Nov. 12, 2020 (GLOBE NEWSWIRE) — Usio, Inc. (Nasdaq: USIO), an integrated electronic payment solutions provider, today announced financial results for the third quarter of 2020, which ended September 30, 2020.

“I am pleased to report all-time record quarterly revenues for the third quarter of 2020,” commented Louis Hoch, President and Chief Executive Officer of Usio.  “Our ability to achieve the Company’s highest quarterly revenue in this challenging economic environment is a testament to the strength of our diverse payments channel strategy — offering ACH, Prepaid and Card Processing services to the growing electronic payments market — as well as to the steadfast and unwavering commitment we have made through continued investment in our growth initiatives, PayFac and Prepaid, over the past several years.  These results put us back on the strong growth trajectory that was temporarily interrupted by COVID-19 in the second quarter.

Card Processing and Prepaid revenues were up 14% and 225%, respectively, compared to the same period of 2019, with growth accelerating sequentially from the second quarter.  We continue to penetrate these markets with innovative technology that make payments simple.  Our prepaid platform has been widely adopted by municipal, charitable and community organizations to distribute government assistance funds, and this success is creating opportunities in adjacent and new markets.  PayFac is gaining traction and the momentum is continuing to build.  In September, we set a record for new monthly merchants added on our PayFac platform.  Net new merchant additions have been growing week by week.  ACH was also up sequentially from the second quarter, although the consumer lending market remains weak.  We are continuing to grow our ACH customers, by both adding new accounts and keeping attrition at a minimum, which we believe will be a key to our continued success as our markets recover.  Record RCC and PIN Debit volumes in the quarter also continue to contribute and have experienced sequential revenue growth in every quarter of the year.  And, by keeping operating expenses relatively flat, our third quarter results reflect positive improvements (reductions) in our Adjusted EBITDA loss and Net Loss from both the prior year quarter as well as the second quarter of this year.  During the quarter we also successfully completed two equity offerings, giving us one of the strongest balance sheets and most distinguished group of institutional investors in the company’s history.  Our strategy has always encompassed a non-organic growth component, and with this fresh capital we now have the resources to not only support our working capital and general corporate needs, but to invest in our growth businesses and undertake accretive acquisitions.

Despite the many challenges encountered throughout 2020, we are on pace for year-over-year revenue and profitability growth, ending the year with one of our strongest balance sheets ever. We believe this provides a solid foundation for continued growth, both organically as well as through strategic, accretive acquisitions in the future.”

Louis Hoch continued, “as always, the health and safety of our employees as well as those around us remains a priority in everything we do.”

Third


Quarter 2020


Financial Summary

Revenues for the quarter ended September 30, 2020 increased by 15% to $8.1 million compared to the same period last year, primarily as a result of strong year over year growth in our prepaid and credit card businesses offset by softness in our consumer lending ACH business. Gross profits increased by 11% to $1.7 million versus the same period last year and gross margins declined by 70 basis points to 21.2% for the quarter ended September 30, 2020 versus 21.8% in the prior year period, primarily driven by a shift in product mix.

Other selling, general and administrative expenses were flat at $2.0 million for the quarter ended September 30, 2020 compared to the same period last year.  For the third quarter of 2020, the operating loss was $0.9 million versus a loss of $1.2 million in the prior year.

Adjusted EBITDA was a loss of $253,921 compared to a loss of $421,459 in the third quarter of 2019, a 40% improvement.  

The company reported a net loss of $0.9 million ($0.06 per share) for the quarter ended September 30, 2020, versus a net loss of $1.2 million ($0.09 per share) for the same period in the prior year.

Nine Months Ended 


September 30, 2020


 Financial Summary

Revenues for the nine months ended September 30, 2020 were $22.9 million, up 10% from $20.8 million from the same period last year. The revenue growth in 2020 is all organic and was derived primarily from our card services business that is anchored by PayFac.  Our prepaid division also contributed to the strong increase. Gross profits in the first nine months of the year were $4.9 million up 11% from $4.4 million in the comparable period of 2019.  Gross margins for the first nine months of 2020 increased by 20 basis points to 21.6% from 21.4% over the same period in 2019.

Other selling, general and administrative expenses increased by 6% to $6.0 million compared to $5.6 million for the same period last year reflecting our continued investment in our PayFac and Prepaid growth initiatives. 

Adjusted EBITDA for year to date period was a loss of $1.0 million compared to a loss of $1.2 million for the same period of 2019, a 12% improvement.

The Company reported a net loss of $3.1 million ($0.22 per share) for the nine months ended September 30, 2020, compared to a net loss of $3.6 million ($0.28 per share) for the same period in the prior year.

Usio continues to be in solid financial condition with $11.4 million in cash and cash equivalents at September 30, 2020. 

Conference Call and Webcast

Usio, Inc.’s management will host a conference call with a live webcast on Friday, November 13, 2020 at 11:00 am Eastern time to provide a business update.  To listen to the conference call, interested parties within the U.S. should call +1-844-883-3890. International callers should call +1-412-317-9246. All callers should ask for the Usio conference call. The conference call will also be available through a live webcast, which can be accessed via the company’s website at www.usio.com/invest.

A replay of the call will be available approximately one hour after the end of the call through November 27, 2020. The replay can be accessed via the Company’s website or by dialing +1-877-344-7529 (U.S.) or +1-412-317-0088 (international). The replay conference playback code is 10149713.
  
About Usio, Inc.

Usio, Inc. (USIO), a leading integrated payment solutions provider, offers a wide range of payment solutions to merchants, billers, banks, service bureaus, and card issuers. The Company operates credit, debit/prepaid, and ACH payment processing platforms to deliver convenient, world-class payment solutions and services to their clients. The strength of the Company lies in its ability to provide tailored solutions for card issuance, payment acceptance, and bill payments as well as its unique technology in the prepaid sector. Usio is headquartered in San Antonio, Texas, and has offices in Austin, Texas, and Franklin, Tennessee, just outside of Nashville. Websites: www.usio.com, www.singularpayments.com, www.payfacinabox.com, www.akimbocard.com and www.ficentive.com. Find us on Facebook® and Twitter.

About Non-GAAP Financial Measures


This press release includes non-GAAP financial measures, EBITDA and adjusted EBITDA, as defined in Regulation G of the Securities and Exchange Act of 1934, as amended. The Company reports its financial results in compliance with GAAP, but believes that also discussing non-GAAP measures provides investors with financial measures it uses in the management of its business. The Company defines EBITDA as operating income (loss), before interest, taxes, depreciation and amortization of intangibles. The Company defines adjusted EBITDA as EBITDA, as defined above, plus non-cash stock option costs and certain non-recurring items, such as acquisitions. These measures may not be comparable to similarly titled measures reported by other companies. Management uses EBITDA and adjusted EBITDA as indicators of the Company’s operating performance and ability to fund acquisitions, capital expenditures and other investments and, in the absence of refinancing options, to repay debt obligations.

Management believes EBITDA and adjusted EBITDA are helpful to investors in evaluating the Company’s operating performance because non-cash costs and other items that management believes are not indicative of its results of operations are excluded. EBITDA and adjusted EBITDA are supplemental non-GAAP measures, which have limitations as an analytical tool. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures do not reflect a comprehensive system of accounting, may differ from GAAP measures with the same names, and may differ from non-GAAP financial measures with the same or similar names that are used by other companies. For a description of our use of EBITDA and adjusted EBITDA, and a reconciliation of EBITDA and adjusted EBITDA to operating income (loss), see the section of this press release titled “Non-GAAP Reconciliation.”

FORWARD-LOOKING STATEMENTS DISCLAIMER

Except for the historical information contained herein, the matters discussed in this release include forward-looking statements which are covered by safe harbors. Those statements include, but may not be limited to, all statements regarding management’s intent, belief and expectations, such as statements concerning our future and our operating and growth strategy. These forward-looking statements are identified by the use of words such as “believe,” “intend,” “continue,” “anticipate,” “schedule,” and “expect” among others. Forward-looking statements in this press release are subject to certain risks and uncertainties inherent in the Company’s business that could cause actual results to vary, including risks related to the COVID-19 pandemic and its effect on the economy, risks related to the realization of the anticipated opportunities from the Singular acquisition, the management of the Company’s growth, the loss of key resellers, the relationships with the Automated Clearinghouse network, bank sponsors, third-party card processing providers and merchants, the security of our software, hardware and information, the volatility of the stock price, the need to obtain additional financing, risks associated with new tax legislation, and compliance with complex federal, state and local laws and regulations, and other risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission including its annual report on Form 10-K for the fiscal year ended December 31, 2019. One or more of these factors have affected, and in the future, could affect the Company’s businesses and financial results in the future and could cause actual results to differ materially from plans and projections. The Company believes that the assumptions underlying the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the objectives and plans will be achieved. All forward-looking statements made in this release are based on information presently available to management. The Company assumes no obligation to update any forward-looking statements, except as required by law.

Contact:

Joe Hassett, Investor Relations
[email protected]
610-228-2110

  

USIO, INC.

CONSOLIDATED BALANCE SHEETS

		September 30, 2020				December 31, 2019
		(Unaudited)
ASSETS
Cash and cash equivalents		$	11,405,119			$	2,137,580
Accounts receivable, net			1,219,370				1,274,001
Settlement processing assets			24,079,975				38,906,780
Prepaid card load assets			7,906,580				528,434
Prepaid expenses and other			185,109				183,575
Current assets before merchant reserves			44,796,153				43,030,370
Merchant reserves			8,234,404				10,016,904
Total current assets			53,030,557				53,047,274
Property and equipment, net			1,729,614				1,557,521
Other assets:
Intangibles, net			1,926,426				2,676,427
Deferred tax asset			1,394,000				1,394,000
Operating lease right-of-use assets			2,308,736				2,480,902
Other assets			422,418				404,055
Total other assets			6,051,580				6,955,384
Total Assets		$	60,811,751			$	61,560,179
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	405,334			$	419,849
Accrued expenses			1,303,757				1,360,551
Operating lease liabilities, current portion			236,700				356,184
Settlement processing obligations			24,079,975				38,906,780
Prepaid card load obligations			7,906,580				528,434
Deferred revenues			83,824				123,529
PPP Loan payable, current portion			342,096				—
Current liabilities before merchant reserve obligations			34,358,266				41,695,327
Merchant reserve obligations			8,234,404				10,016,904
Total current liabilities			42,592,670				51,712,231
Non-current liabilities:
PPP Loan payable, non-current portion			471,404				—
Operating lease liabilities, current portion			2,230,639				2,279,613
Total liabilities			45,294,713				53,991,844
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; -0- shares outstanding at September 30, 2020 (unaudited) and December 31, 2019, respectively			—				—
Common stock, $0.001 par value, 200,000,000 shares authorized; 25,887,785 and 18,224,577 issued, and 24,665,486 and 17,104,998 outstanding at September 30, 2020 (unaudited) and December 31, 2019, respectively			194,318				186,656
Additional paid-in capital			88,392,782				77,055,273
Treasury stock, at cost; 1,222,299 and 1,119,579 shares at September 30, 2020 (unaudited) and December 31, 2019, respectively			(2,065,763	)			(1,885,452	)
Deferred compensation			(5,793,116	)			(5,636,154	)
Accumulated deficit			(65,211,183	)			(62,151,988	)
Total stockholders’ equity			15,517,038				7,568,335
Total Liabilities and Stockholders’ Equity		$	60,811,751			$	61,560,179

USIO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 (UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Revenues		$	8,137,077			$	7,087,732			$	22,869,309			$	20,833,143
Cost of services			6,414,807				5,539,314				17,933,089				16,383,149
Gross profit			1,722,270				1,548,418				4,936,220				4,449,994
Selling, general and administrative:
Stock-based compensation			267,223				315,259				903,326				954,770
Other SG&A expenses			1,976,191				1,969,877				5,955,221				5,602,171
Depreciation and amortization			390,216				491,749				1,160,255				1,475,291
Total operating expenses			2,633,630				2,776,885				8,018,802				8,032,232
Operating (loss)			(911,360	)			(1,228,467	)			(3,082,582	)			(3,582,238	)
Other income and (expense):
Interest income			10,157				20,781				22,800				66,475
Other income (expense)			186				608				912				185
Other income and (expense), net			10,343				21,389				23,712				66,660
(Loss) before income taxes			(901,017	)			(1,207,078	)			(3,058,870	)			(3,515,578	)
Income tax expense			35,000				31,956				325				71,956
Net (Loss)		$	(936,017	)		$	(1,239,034	)		$	(3,059,195	)		$	(3,587,534	)
Earnings (Loss) Per Share
Basic earnings (loss) per common share:		$	(0.06	)		$	(0.09	)		$	(0.22	)		$	(0.28	)
Diluted earnings (loss) per common share:		$	(0.06	)		$	(0.09	)		$	(0.22	)		$	(0.28	)
Weighted average common shares outstanding
Basic			15,474,171				13,054,962				13,924,803				12,906,206
Diluted			15,474,171				13,054,962				13,924,803				12,906,206

USIO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

		Nine Months Ended
		September 30, 2020				September 30, 2019
Operating Activities
Net (loss)		$	(3,059,195	)		$	(3,587,534	)
Adjustments to reconcile net (loss) to net cash provided (used) by operating activities:
Depreciation			410,254				725,291
Amortization			750,001				750,000
Non-cash stock-based compensation			903,326				954,770
Amortization of warrant costs			26,958				26,955
Changes in operating assets and liabilities:
Accounts receivable			54,631				55,504
Prepaid expenses and other			(1,534	)			(111,230	)
Operating lease right-of-use assets			172,166				(2,547,803	)
Other assets			(18,363	)			(26,665	)
Accounts payable and accrued expenses			(71,309	)			294,717
Operating lease liabilities			(168,458	)			2,700,742
Prepaid card load obligations			7,378,146				189,854
Merchant reserves			(1,782,500	)			(2,443,899	)
Deferred revenue			(39,705	)			116,765
Deferred rent			—				(79,748	)
Net cash provided (used) by operating activities			4,554,418				(2,982,281	)
Investing Activities
Purchases of property and equipment			(582,347	)			(536,405	)
Net cash (used) by investing activities			(582,347	)			(536,405	)
Financing Activities
Proceeds from PPP Loan Program			813,500				—
Proceeds from public offering, net of expenses			7,257,925				1,793,905
Proceeds from private offering			3,000,000				—
Purchases of treasury stock			(180,311	)			(52,584	)
Net cash provided by financing activities			10,891,114				1,741,321
Change in cash, cash equivalents, prepaid card load assets and merchant reserves			14,863,185				(1,777,365	)
Cash, cash equivalents, prepaid card load assets and merchant reserves, beginning of year			12,682,918				15,340,980
Cash, Cash Equivalents, Prepaid Card Load Assets and Merchant Reserves, End of Period		$	27,546,103			$	13,563,615
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest		$	—			$	—
Income taxes			93,525				82,206
Non-cash transactions:
Issuance of deferred stock compensation			1,559,520				—

USIO, INC.

STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)
 

		Common Stock								Additional Paid- In				Treasury				Deferred				Accumulated				Total Stockholders’
		Shares				Amount				Capital				Stock				Compensation				Deficit				Equity
Balance at December 31, 2019			18,224,577			$	186,656			$	77,055,273			$	(1,885,452	)		$	(5,636,154	)		$	(62,151,988	)		$	7,568,335
Issuance of common stock under equity incentive plan			51,000				51				59,440				—				—				—				59,491
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Deferred compensation amortization			—				—				—				—				228,219				—				228,219
Purchase of treasury stock			—				—				—				(26,629	)			—				—				(26,629	)
Net (loss) for the period			—				—				—				—				—				(835,009	)			(835,009	)
Balance at March 31, 2020			18,275,577			$	186,707			$	77,123,698			$	(1,912,081	)		$	(5,407,935	)		$	(62,986,997	)		$	7,003,392
Issuance of common stock under equity incentive plan			1,500,544				1,500				1,641,304				—				(1,559,520	)			—				83,284
Warrant compensation costs			—				—				8,988				—				—				—				8,988
Deferred compensation amortization			—				—				—				—				267,207				—				267,207
Purchase of treasury stock			—				—				—				(55,819	)			—				—				(55,819	)
Net (loss) for the period			—				—				—				—				—				(1,288,169	)			(1,288,169	)
Balance at June 30, 2020			19,776,121			$	188,207			$	78,773,990			$	(1,967,900	)		$	(6,700,248	)		$	(64,275,166	)		$	6,018,883
Issuance of common stock under equity incentive plan			32,323				32				149,961				—				—				—				149,993
Warrant compensation costs			—				—				8,985				—				—				—				8,985
Cashless warrant exercise			27,051				27				(27	)			—				—				—				—
Reversal of deferred compensation amortization that did not vest			(450,000	)			(450	)			(791,550	)			—				594,900				—				(197,100	)
Issuance of common stock, public offering			4,705,883				4,705				7,253,220				—				—				—				7,257,925
Issuance of common stock, private offering			1,796,407				1,797				2,998,203				—				—				—				3,000,000
Deferred compensation amortization			—				—				—				—				312,232				—				312,232
Purchase of treasury stock			—				—				—				(97,863	)			—				—				(97,863	)
Net (loss) for the period			—				—				—				—				—				(936,017	)			(936,017	)
Balance at September 30, 2020			25,887,785			$	194,318			$	88,392,782			$	(2,065,763	)		$	(5,793,116	)		$	(65,211,183	)		$	15,517,038
Balance at December 31, 2018			17,129,680			$	185,561			$	74,568,627			$	(1,813,546	)		$	(6,270,675	)		$	(57,036,241	)		$	9,633,726
Issuance of common stock, public offering			769,230				769				1,793,136				—				—				—				1,793,905
Issuance of common stock under equity incentive plan			62,222				62				58,551				—				—				—				58,613
Warrant compensation cost			—				—				8,985				—				—				—				8,985
Deferred compensation amortization			—				—				—				—				224,795				—				224,795
Purchase of treasury stock			—				—				—				(21,822	)			—				—				(21,822	)
Net (loss) for the period			—				—				—				—				—				(1,072,889	)			(1,072,889	)
Balance at March 31, 2019			17,961,132			$	186,392			$	76,429,299			$	(1,835,368	)		$	(6,045,880	)		$	(58,109,130	)		$	10,625,313
Issuance of common stock under equity incentive plan			53,445				53				133,462				—				—				—				133,515
Warrant compensation cost			—				—				8,985				—				—				—				8,985
Deferred compensation amortization			—				—				—				—				222,585				—				222,585
Reversal of deferred stock compensation that did not vest			(6,000	)			(6	)			(13,254	)			—				13,260				—				—
Purchase of treasury stock			—				—				—				(28,693	)			—				—				(28,693	)
Net (loss) for the period			—				—				—				—				—				(1,275,611	)			(1,275,611	)
Balance at June 30, 2019			18,008,577			$	186,439			$	76,558,492			$	(1,864,061	)		$	(5,810,035	)		$	(59,384,741	)		$	9,686,094
Issuance of common stock under equity incentive plan			2,500				3				92,483				—				—				—				92,486
Warrant compensation cost			—				—				8,985				—				—				—				8,985
Deferred compensation amortization			—				—				—				—				224,464				—				224,464
Reversal of deferred stock compensation that did not vest			—				—				(1,691	)			—				—				—				(1,691	)
Purchase of treasury stock			—				—				—				(2,069	)			—				—				(2,069	)
Net (loss) for the period			—				—				—				—				—				(1,239,034	)			(1,239,034	)
Balance at September 30, 2019			18,011,077			$	186,442			$	76,658,269			$	(1,866,130	)		$	(5,585,571	)		$	(60,623,775	)		$	8,769,235

USIO, INC

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

(UNAUDITED)

		Three Months Ended September 30,								Nine Months Ended September 30,
		2020				2019				2020				2019
Reconciliation from Operating (Loss) to Adjusted EBITDA:
Operating (Loss)		$	(911,360	)		$	(1,228,467	)		$	(3,082,582	)		$	(3,582,238	)
Depreciation and amortization			390,216				491,749				1,160,255				1,475,291
EBITDA			(521,144	)			(736,718	)			(1,922,327	)			(2,106,947	)
Non-cash stock-based compensation expense, net			267,223				315,259				903,326				954,770
Adjusted EBITDA		$	(253,921	)		$	(421,459	)		$	(1,019,001	)		$	(1,152,177	)
Calculation of Adjusted EBITDA margins:
Revenues		$	8,137,077			$	7,087,732			$	22,869,309			$	20,833,143
Adjusted EBITDA			(253,921	)			(421,459	)			(1,019,001	)			(1,152,177	)
Adjusted EBITDA margins			(3.1	)%			(5.9	)%			(4.5	)%			(5.5	)%